CA Sandeep Kanoi
Union Finance Minister Arun Jaitley is expected to
present his first full term budget on 28th February 2015. Taxpayers
once again start expecting Budget will provide them long overdue tax reliefs.
Individual and Salaried Tax payer expects that what Mr. Jaitley not done in
last budget will do in this budget and increase income tax exemption limit from
Rs. 2.50 Lakh to Five Lakh.
Some of the Middle class expectation from the Coming Union
Budget of Mr. Arun Jaitley are as follows:-
1. Basic Exemption Limit: – Increase in Income
Tax Exemption Limit to atleast 3.50 Lakh to meet the increased cost of living.
2. Medical Reimbursement – Limit for exemption for
Medical reimbursement perquisites should be increased to Rs. 50000/- from
existing Rs. 15000/- to meet the increased cost of Medical services.
3. Transport Allowance – The transportation
allowance granted by the employer to his employee for commuting between the
place of work and residence is tax-free to the extent of Rs 800 per month. This
limit was fixed more than a decade ago, and needs to be revised upwards to at
least Rs 3,000 per month, given the rising commuting costs.
4. Section 80C Limit – Section 80C was
introduced in place of section 88 w.e.f. 1-4-2006. Limit of One Lakh of
Investment under section 80C was fixed in A.Y. 2006-07 and after 9 Years the
limit is increased by mere Rs. 50,000/- from A.Y. 2015-16 despite multifold
hike in prices. The Limit needs to be increased to atleast to Rs. 3 Lakh.
5. Increase in Home Loan Interest Limit - Home loan Interest
exemption limit for self-occupied house was fixed at Rs. 1,50,000/- wef A.Y.
2002-03 and after 13 Years the same been increased by mere Rs. 50,000/- to Rs.
2 Lakh wef A.Y. 2015-16. The Limit should be raised to at least 5 Lakh
considering the 6-7 time raise in prices of property across the country.
6. Faster process of Income Tax Refund – Income Tax Refund
needs to be processed faster and taxpayers should not be penalized for deficit
in revenue target by withholding the refunds and further there should be a
mechanism which can insure that taxpayers should not be penalized for mistakes
of tax deductor.
7. Revision in education allowances: The exemption of
educational allowance Rs.100 per child per month & hostel expenses
allowance Rs.300 per child per month is the limit fixed long back. The same
limit can be revisited and correct according to the current cost of
education.Even though the deduction of tuition fees allowed under section 80C
up to Rs. 1.50 Lakhs, expenses other than tuition fees also is the major amount
in current educational costs.
8. Deduction in respect of notice period pay: This is most debatable
issue during the change of employment. If employee resigns from the current
employer and going with serving notice period, the payment made by the employee
to employer to compensate will be deducted from his salary payable. But as per
tax calculation it will be shown as income but there is no clear provision in
deduction for the same. So it can be considered in this budget.
9. TDS issues faced by individual: Common problem facing
by salaried individual/ non salaries case also is that TDS credit is not
reflecting in the form 26 AS and unable to match the TDS amount. Even though
TDS amount recovered from the income and deductor fails to pay the TDS or not
update the TDS return, it is not reflecting in the form 26AS. This is very
embracing situation for any person, after paying tax also not getting credit
due mistake of others. Even though some recent judgements are favoured to the
deductees, however this has to be provisioned in the act itself to avoid the
litigation issues
10. Increase in Threshold limit for Wealth tax - Currently, Wealth Tax
is levied at the rate of 1% on net wealth exceeding Rs. 30 Lacs. We expect it
to be increased to Rs. 1 crore.
11. Standard Deduction must be back – Till Assessment Year
2005-06, there was standard deduction for salaried employees. In this period of
inflation, government must allow standard deduction to salaried employees once
again.
12. Leave Salary – Leave salary is
exempted at retirement to maximum of Rs 3,00,000 and it too was fixed in 1998.
Government had revised maximum exempted amount of gratuity to Rs 10,00,000 from
Rs 3,50,000, it may revised this limit too.
13. Free Food – Value of free food and
non-alcoholic beverages or meal vouchers provided by the employer is exempt
from income tax to the extent of Rs. 50 per meal. Looking at present inflation,
it should be Rs 100 per meal.
14. Interest Free Loan – Interest
free/Concessional loan to employees is exempt, where Loan amount does not
exceed in aggregate Rs 20,000. It will be good if this limit is revised to
atleast Rs 50,000.
15. Reduce the maximum tax rate: Last year, removing
the surcharge only benefited the higher income group and there was no respite
for the lower income group. So, this year lower and middle income group can be
benefitted by reducing the peak rate from current 30% to 25%. Further, the peak
rate should be attracted at significantly higher income slab (as compared to
current limit of Rs 5,00,000). Though this aspect has been recognised in the
proposed Direct Tax Code (DTC), the same also needs to be considered in the
forthcoming budget.
In addition to above people wants an end to Tax terrorism and
wants a simple taxpayer friendly tax regime.
Image courtesy of nokhoog_buchachon at FreeDigitalPhotos.net
(Compiled from Various Articles on Taxguru with Own Inputs)
